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Interesting article and yes of course they are ripe for a takeover maybe it’s what they want?
Thanks for the article I didn't see this at the weekend.
Pretty soon Britain’s second-biggest milk processor, Dairy Crest, will have to make a choice: jump into the water and swim, or get swallowed up by the sea. The dairy industry is in the midst of violent change. In the past year, Dairy Crest’s two domestic rivals have been gobbled up by deep-pocketed foreign predators. Robert Wiseman fell to Germany’s Müller, while Milk Link combined with Arla, the Danish co-operative. That has left Dairy Crest exposed. Its problem is that its core liquid milk operation — pasteurising and processing milk for the masses — is barely break-even. It brings in more than £1bn in annual turnover — roughly two-thirds of Dairy Crest’s total business — yet profits were less than 1%. For processors, the key is branded yogurts, butters and cheeses. The margins are miles better. Dairy Crest needs to beef up beyond milk, and it has the cash to do so. It banked £347m from the sale of its European spreads business, St Hubert, this summer. Word around the cheese tray is that it has drawn up a list of targets. What is clear is that Dairy Crest is fast approaching its sink or swim moment. Its shares, which closed on Friday at 344p, are cheap. Despite the challenges, European rivals have cast a ravenous eye on Britain. Dairy Crest had better get its water wings ready, The Sunday Times´ Inside the City column says.
Hopefully not long until they announce who they are looking to purchase, any ideas.......... Ambrosia, Yeo Valley, the Arla UHT Plant or something else?
The new analysts have come on board since the DCG visit to their Kirkby site this week.
There are new analysts that have given ratings on DCG since the 1/2 year update last week, these are all indicating a 'Buy' position. Targeting a share price from £4 to £.450. They are also debt free and looking to make an acquisition in the near future.
why the share price is going up so much?
"We continue to take a number of decisive actions to achieve this, including implementing milk selling price increases, closing our Aintree creamery, consolidating milk rounds to allow the closure of 23 depots in the six months and reducing overheads. Plans are on track to close our Fenstanton dairy, as previously announced, this autumn," it explained. Key to share price performance is the use of the proceeds from St Hubert. Acquisitions are likely to be materially earnings enhancing given the low returns on cash. Analysts at Peel Hunt however have chosen to focus in a reserach note today on the potential for M&A, saying that: "Key to share price performance is the use of the proceeds from St Hubert. Acquisitions are likely to be materially earnings enhancing given the low returns on cash."
Dairy Crest warned of lower first half profits, as challenging conditions continue, but said profit expectations for the full year ending March 31st 2013 remain unchanged. Trading in the first half-year has remained challenging and profits, having adjusted for the disposal of the French spreads business, St Hubert, will be lower than the same period last year, the group said in a company statement. The company's four main brands; Cathedral City, Country Life, Clover and Frijj, performed strongly in the first half, after it increased marketing spend. Mark Allen, Chief Executive, commented: "We are pleased with our first half performance despite the significant pressures on our business. Although we expect these to continue into the second half our first half performance together with our plans for the second half means that our profit expectations for the full year remain unchanged." Dairy Crest said, in line with its continued drive efficiency across its business, is in talks with employees on plans to consolidate its spreads production into a single UK location, an existing facility at Kirkby, Merseyside. As a result, its site in Crudgington, Shropshire, will potentially close in 2014. Commenting on its Dairies business, in which it has faced unprecedented market conditions, it says it remains focused on achieving a 3% return on sales in this business in the medium term.
Improved financial position Following the sale of St Hubert, our financial position is much improved. We received €430 million on 28 August 2012 which has been used in part to repay drawdowns from our revolving credit facility. The balance has been placed on short-term deposits, with the position for the longer term currently under review. Our aim in deploying cash will be to preserve the Group's capacity to make acquisitions, while providing appropriate long-term funding for the pension fund and driving towards a more efficient debt structure. Mark Allen, Chief Executive, commented: 'We are pleased with our first half performance despite the significant pressures on our business. Although we expect these to continue into the second half our first half performance together with our plans for the second half means that our profit expectations for the full year remain unchanged. At the same time we have continued to move the business forward and the proceeds from the sale of St Hubert leave us much stronger financially.' Dairy Crest is hosting a visit for analysts and investors at its Kirkby Spreads manufacturing facility on the afternoon of Monday 24 and Tuesday 25 September. The management team will make presentations on our Spreads and Dairies Businesses, as well as the Group's sales and marketing activities. These will be made available on Dairy Crest's website at www.dairycrest.co.uk/investors. No material new information will be disclosed in these presentations.
Decisive action in Dairies Our Dairies business has been facing unprecedented market conditions but we remain focused on achieving a 3% return on sales in this business in the medium term. We continue to take a number of decisive actions to achieve this, including implementing milk selling price increases, closing our Aintree creamery, consolidating milk rounds to allow the closure of 23 depots in the six months and reducing overheads. Plans are on track to close our Fenstanton dairy, as previously announced, this autumn. We increased the price we pay our non-aligned supplier farmers for milk by 1.85 pence per litre from 1 October 2011, but a steep fall in cream prices led to a price reduction of 2 pence per litre from 1 May 2012. A second planned reduction, due to take place on 1 August 2012 was postponed while we negotiated price increases with our customers and this had a small adverse effect on profits in the period. We have today announced higher farmgate milk prices for our suppliers. These reflect the expectations of improving returns from commodity markets and higher selling prices.
TRADING UPDATE FOR THE SIX MONTHS ENDING 30 SEPTEMBER 2012 Dairy Crest is issuing the following pre-close trading update for the six months ending 30 September 2012 ahead of announcing its Interim Results on 8 November 2012. Trading in the first half of the year has remained challenging and our profits, having adjusted for the disposal of our French spreads business, St Hubert, will be lower than the same period last year. However, our profit expectations for the full year ending 31 March 2013 remain unchanged. Strong momentum in Brands Our four key UK brands (Cathedral City, Country Life, Clover and Frijj) have continued to perform strongly in the first half. Increased marketing expenditure behind these brands is supporting this growth. All four have been advertised on television in the period - the first time that has ever happened. Innovation remains a focus in our ongoing drive for added value sales. For example, Chedds, natural cheese for children (whose annual retail sales now exceed £7 million), Frijj Incredibles and Cathedral City Selections are all performing strongly. Further innovations are planned for the second half, including a long-life variant of Frijj. This is aimed at the convenience market and provides a significant opportunity for further growth. As part of our continued drive to grow and improve efficiency across our business, we have decided to consult with employees on plans to consolidate our spreads production into a single UK location, our existing facility at Kirkby, Merseyside. As a result of the consolidation our site in Crudgington, Shropshire, will potentially close in 2014.
http://www.investegate.co.uk/Article.aspx?id=201209240700069080M
Mark Allen, Chief Executive, commented: "Our focus at the start of the year has been on doing the right things to restore our Dairies business to a satisfactory level of profitability as well as to continue to grow our brands and we are pleased with the progress we are making. At the same time we are taking another significant step in the evolution of Dairy Crest by following through our strategic decision to dispose of St Hubert and refocus on the UK." Dairy Crest's Annual General Meeting will be held today at midday at the offices of Eversheds LLP, 1 Wood Street, London EC2V 7WS. Dairy Crest expects to issue its half-yearly trading update on 24 September 2012 and its Interim Results for the six months ending 30 September 2012 on 8 November 2012.
AGM and Interim Management Statement Anthony Fry, Chairman of Dairy Crest, will make the following Interim Management Statement at the Company's Annual General Meeting later today. Trading in line with expectations and St Hubert sale creates opportunities Dairy Crest's overall trading in the first quarter has been challenging, especially in our Dairies business. However our expectations for the full year remain unchanged. Our financial position remains in line with our expectations. As expected it has been a difficult quarter for our Dairies business, along with the rest of the sector. However, we have taken decisive steps to return it to a satisfactory level of profitability. We have set a medium term target of 3% return on sales and are making progress towards it. Plans to close two dairies announced in April are on schedule and resulting capacity reductions are allowing us to improve selling prices in parts of this business. Lower returns from commodity cream markets have also led us to announce milk purchase price cuts. Regrettably these cuts have put pressure on our supplying farmers and we are working with them on plans to reduce the impact of these cuts. These plans include the early adoption of a new code of practice in relation to our milk supply contracts. As announced on 29 June 2012 we have received a binding offer for our French spreads business, St Hubert, for €430 million (£344 million). If the proposed transaction completes, the proceeds of this disposal will substantially reduce our net debt. From a strengthened financial position we will then consider a range of options taking into account the interests of all stakeholders. Total sales of our four UK key brands (Cathedral City, Country Life, Clover and Frijj) have increased by 15% compared to the same period last year. We continue to increase our investment in marketing these brands and for the first time all four brands will feature on television in the first half of the year. We remain committed to making efficiency savings of £20 million this year and are on track to meet this target.
http://www.investegate.co.uk/Article.aspx?id=201207170700037789H
July 6 (Reuters) - Dairy Crest Group PLC: * Investec raises Dairy Crest target price to 377P from 340P, rating
Mark Allen, Chief Executive of Dairy Crest, said: "We are delighted to have agreed in principle the proposed disposal of St Hubert, at a price which reflects the excellent progress the business has made under our ownership. Over the coming months, with a strengthened balance sheet, we will be able to consider a wide range of opportunities including synergistic acquisitions in the UK. This will allow us to employ the same brand-building skills that have contributed to the strong growth of our UK brands and St Hubert's success. However, we will only do this within strict financial criteria and where an acquisition would add value for shareholders."
Overview Dairy Crest, the UK's leading dairy foods company, today announces that it has received a binding offer from Montagu Private Equity SAS regarding the proposed disposal of the entire issued share capital of St Hubert for a consideration of €430 million (£3441 million) payable in cash (the "Transaction"). Background to and reasons for the Transaction The Transaction follows Dairy Crest's announcement on 9 March 2012 of a strategic review of St Hubert. During the review a range of options were considered but as a result of substantial interest from a number of potential purchasers it was decided to pursue a divestment. St Hubert was purchased in January 2007 for €370 million (approximately £248 million). Since its acquisition Dairy Crest has increased the revenue and EBIT for St Hubert by 35% and 45%, respectively. St Hubert has been a successful part of the Dairy Crest group and has consistently increased its market share and profitability. However, Dairy Crest has been unable to make additional synergistic acquisitions in Continental Europe as it envisaged at the time of the acquisition and it believes that greater value may be generated for shareholders through the proposed disposal of St Hubert.
http://www.investegate.co.uk/Article.aspx?id=201206290700044583G
Shore Capital retained its "buy" recommendation for Dairy Crest (DCG), as the milk and cheese company continues the restructuring of its business. The broker was impressed by the firm's 27% EBIT growth in the cheese division, for the year ended 31st March 2012, to 35.5 million pounds, noting strong demand for its Cathedral City brand. Shore added that if the group sold its French St. Hubert business it would significantly deleverage the business, providing room to make complementary acquisitions.
Troubled Dairy Crest Takes Axe To Field Sales Team Dairy Crest has axed a quarter of its field sales team, as it retreats from supplying milk to the fiercely competitive middle-ground market. The company today said 10 of its 40-strong nationwide field sales team would be made redundant. “We are reducing our exposure to the middle ground and unfortunately those jobs are going as a result of that,” a spokesman for Dairy Crest told The Grocer. As Dairy Crest was selling less milk to the middle ground, it needed fewer people, he added. The news comes at a tough time for Dairy Crest. In April, the dairy giant was informed by Tesco that its contract to supply 50 million litres of milk would cease from July. Rival Arla gained the supply. In the same week, Dairy Crest announced it was looking to close its Aintree and Hunstanton dairies, putting 470 jobs at risk, although it denied the closures were linked to Tesco’s decision to move its supply. http://www.thegrocer.co.uk/companies/suppliers/troubled-dairy-crest-takes-axe-to-field-sales-team/229052.article?utm_source=RSS_Feed&utm_medium=RSS&utm_campaign=rss
Shore Capital upgraded its stance on Dairy Crest (DCG) from "hold" to "buy", with a target price of 350p. The broker feels that the cheese and milk producer has been oversold as investors reacted to the sharp decline in margins in the UK liquid milk industry. However, Shore noted the proposed sale of its French St. Hubert business could generate between 325 million and 375 million pounds and also noted the strength of Dairy Crest's brands such as Cathedral City. The shares advanced by 4.5p to 294.9p
DC lost 3% of business today, maybe that why they took fall today. now that they have restructured, could increase profit.
Thanks Mulled Was going to invest here but didn't like the way the chart looked at the time (before the last spike up from around 320p) bit like what cna is like now. Good enough firm but share price too high for me yet.